Gaming companies talking with state about casino license

By GARRY RAYNOState House BureauApril 17. 2013 10:44PMCONCORD - Five gaming companies have contacted the state about competing for a casino license House budget writers were told, although lawmakers have yet to approve legislation.

Lottery Commission executive director Charlie McIntyre said he has met with five companies about a casino and noted the interest in Massachusetts for its three casino locations.

However, the potential bidders will not have a New Hampshire casino license "for life," Gov. Maggie Hassan's legal counsel, Lucy Hodder, told the Joint House Finance and Ways and Means committee. The committee will review Senate Bill 152, which would establish one casino in New Hampshire with up to 5,000 video lottery machines and 150 table games.

Hodder said lawmakers could change their minds about gambling or could change companies during the license renewal process if the license holder is not meeting requirements.

She said she assumes lawmakers could change the law after the statute is in place and quoted a section of the bill that says the license is "a revocable privilege and no holder requires any vested right in such license or permission."

"After five years, New Hampshire may decide it does not like gambling," Hodder said. "It is not a contract, it is a license."

She did warn lawmakers they would probably face a substantial lawsuit if they decide to change companies just because they like another one better.

Under the bill, the initial 10-year license would cost $80 million and would be renewed for five years for $1.5 million and every five years thereafter.

On Wednesday, the committee heard four experts on the issue as it begins reviewing the bill that passed the Senate on a 16-8 vote, and has the backing of Hassan.

Hassan included $80 million in casino licensing fees in her proposed budget, although the House did not. The Senate is working on its version of the $11 billion state budget now.

Hodder and McIntyre explained the proposed legislation to the committee and outlined the regulatory and enforcement structure that includes the commission, which would be the lead regulator and enforcer, the State Police and the Attorney General's Office.

During the day-long session, lawmakers were warned that gambling may not have the benefits touted by supporters nor the costs claimed opponents as all sides exaggerate their claims.

Andy Lietz, who chaired former Gov. John Lynch's Gaming Study Commission, reiterated one of the commission's findings that the regulatory structure should be in place before a casino opens its doors.

He told the committee that the current regulations need to be revisited and revised before going forward including monitoring and control.

Connecticut officials told the commission "you need to settle as much as possible before the casino operates," Lietz said, using such examples as revenue sharing, police and infrastructure costs.

"You need to debate the different questions now instead of in a charged environment," Lietz said. "The long-term interest has to be paramount instead of the short-term need."

He warned that the revenue from casino gambling is volatile because it is affected by economic cycles including the recent recession, which caused revenues to fall significantly.

Entities become dependent on gaming revenues, not just government, Lietz said, but also charities that raise millions of dollars from gaming.

Under the bill, the casino operator would hold charities harmless by providing money to maintain revenues at 2012 levels.

But the bill says if a charity stops operation for more than a year, it would no longer be eligible for the grant.

Ways and Means Committee Vice Chair Rep. Patricia Lovejoy, D-Stratham, questioned what would happen if one of the Manchester charity gaming facilities closed. Those charities would not likely be able to find space elsewhere, she noted.

Others were concerned about new charities and if they could qualify for grants.

Steve Norton, director of the NH Center for the Public Policy Studies, outlined a report issued in February indicating gaming revenue for the state may not cover the social costs of expanded gaming with a casino the size of the one proposed in the bill and at the tax rates on the video lottery machines and table games.

He did tell the commission the state could lose about $75 million in revenue over the biennium if it does nothing and casinos opens at Suffolk Downs in Revere and in Palmer, Mass.

The committee also heard from Clyde W. Barrow, director of the Center for Policy Analysis at the University of Massachusetts-Dartmouth, who told the committee the Northeastern United states from Virginia to Ohio to Maine has seen a significant increase in gaming facilities in the last 10 years.

The only states without gaming facilities are Massachusetts, New Hampshire and Vermont.

Barrow told the committee the bill's tax rates and license fee are about the average today for new facilities.

He told lawmakers they could add provisions to the bill to protect local businesses and entertainment centers.

Subcommittees will meet next week to work on the bill. The full committee is expected to vote on the bill May 21 and the full House May 29.